Consider Scooping Up These 3 Software Stocks Down More Than 15%

With the continuing increase in COVID-19 omicron cases, most companies are delaying their return-to-office plans. This is expected to boost the demand for software solutions.

According to Statista, the software market is expected to grow at a 7.4% CAGR to $824.85 billion by 2026. Consistent innovations in artificial intelligence (AI) and the internet of things (IoT) are also expected to help the industry grow.

So, against that backdrop, we think it could be wise to bet on fundamentally sound software stocks Manhattan Associates, Inc. (MANH), Commvault Systems, Inc. (CVLT), and Model N, Inc. (MODN). They are currently trading below their 52-week price highs but have significant upside potential.

Click here to check out our Software Industry Report 

Manhattan Associates, Inc. (MANH)

Supply chain commerce solutions provider MANH’s solutions consist of software, services, and hardware, which coordinates people, workflows, assets, events, and tasks across the functions linked in a supply chain from planning through execution. The Atlanta, Ga., company operates through three segments: North and Latin America; Europe, the Middle East and Africa (EMEA); and Asia Pacific (APAC).

On December 8, 2021, MANH announced that the leading British grocer, Asda, had chosen Manhattan Active Warehouse Management to help evolve its logistics network in the U.K. Jon Parry, vice president, Asda Logistics Services, commented, “Consumer expectations have significantly changed over the last 18 months, and we need to evolve our technology to drive greater efficiencies from our logistics operation.”

MANH’s total revenue increased 13% year-over-year to $169.19 million for its fiscal third quarter, ended September 30, 2021. Its operating income came in at $42.41 million, up 21.2% year-over-year. While its net income increased 46.8% year-over-year to $36.65 million, its EPS was $0.57, up 46.2% year-over-year.

Analysts expect MANH’s revenue and EPS to increase 11.7% and 21%, respectively, year-over-year to $655 million and $2.13 in its fiscal 2021. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 46.9% in price to close yesterday’s trading session at 152.04. It is currently trading 19.4% below its 52-week high of $188.52, which it hit on November 4, 2021.

MANH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

MANH has an A grade for Quality and a B grade for Sentiment. It is ranked #25 of 169 stocks in the Software - Application industry. Click here to see the additional POWR Ratings for Value, Growth, Stability, and Momentum for MANH.

Commvault Systems, Inc. (CVLT)

Oceanport, N.J.-based CVLT provides data protection and information management software applications and related services in the United States and internationally. Its Intelligent Data Services Platform is available as a software subscription.

On October 22, 2021, CVLT announced the availability of Commvault Backup & Recovery and Commvault Professional Services in AWS Marketplace. Stephen Orban, General Manager, AWS Marketplace and Control Tower Services at AWS, said, "We're happy to welcome Commvault Backup & Recovery to AWS Marketplace and are excited to see how customers will benefit from Commvault's data protection solutions."

CVLT’s total revenues came in at $177.84 million for its fiscal second quarter, ended September 30, 2021, up 3.9% year-over-year. Its software and products revenue were $75.26 million, up 4.1% year-over-year. And its net income was $1.73 million, compared to a $41.17 million loss in the year-ago period. Also, its EPS was $0.04, compared to an $0.89  loss per share in the prior period.

For its fiscal year 2023, analysts expect CVLT’s revenue to be $803.85 million, representing a 6.7% year-over-year rise. The company’s EPS is expected to increase 16.7% year-over-year to $2.72 in the next year. It surpassed the EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 23.3% in price to close yesterday’s trading session at $67.96. It is currently trading 19.3% below its 52-week high of $84.22, which it hit on September 3, 2021.

CVLT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Quality and a B grade for Growth and Value.

Click here to see CVLT’s ratings for Momentum, Stability, and Sentiment as well. Again, CVLT is ranked #4 in the Software - Application industry.

Model N, Inc. (MODN)

MODN provides cloud revenue management solutions for life sciences and high-tech companies. Its offerings include Global Pricing Management, Global Tender Management, Provider Management, Payer Management, Government Pricing, and Medicaid. MODN is headquartered in Redwood City, Calif.

On November 9, 2021, Jason Blessing, president and CEO of MODN, said, “I am proud of our execution this past year, and I’m optimistic about the opportunity ahead for Model N. We are entering fiscal 2022 with positive momentum.”

MODN’s total revenues increased 24.2% year-over-year to $51.48 million for its fiscal fourth quarter ended September 30, 2021. Its subscription revenue came in at $38.16 million, up 28.6% year-over-year. And its gross profit increased 15.7% year-over-year to $28.78 million.

For its fiscal year 2023, MODN’s revenue is expected to grow 12.4% year-over-year to $238.95 million, and its EPS is expected to increase 28.3% year-over-year to $0.59 in the next year. It surpassed the EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $29.15. It is currently trading 39.5% below its 52-week high of $48.20, which it hit on February 10, 2021.

MODN’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has a B grade for Growth and Quality.

MODN is ranked #24 in the Software - Application industry. Click here to see the additional POWR Ratings for MODN (Value, Momentum, Stability, and Sentiment).

Click here to check out our Software Industry Report

MANH shares were trading at $152.82 per share on Wednesday afternoon, up $0.78 (+0.51%). Year-to-date, MANH has gained 45.29%, versus a 26.27% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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